A land value tax (LVT) is an economic policy tool that can be used to support the objectives of Smart Growth development. Its importance is significant to government finance directors as well as community and city planners. This tool splits the standard property tax into its two components of land values and building values. The tax rate is increased on the land part of the property and decreased on the building. The increased tax on land has a negative capitalization effect, resulting in land being priced closer to its true market value. The ability to obtain buildable infill lots at competitive prices makes this type of development more attractive to builders. The decreased tax on building improvements has a positive capitalization effect, similar to other property tax abatements. This provides an economic incentive to develop densely and compactly. This combination of disincentives (the increased holding costs on vacant or underused lots) and incentives (diminished or eliminated taxes on buildings), supports Smart Growth goals of infill directed, compact and dense development, affordable housing, distinctive neighborhoods, and mixed use building.
Municipal Insolvency in Pennsylvania - Improving Act 47
Act 47 is Pennsylvania's answer to what happens when a city loses so much tax base it cannot meet its obligations. Act 47 is regarded as a blessing and curse. This paper examines the Act, and how it can be improved by using land value based policy recommendations.
North Adams was once a proud linchpin of a robust industrial economy in Berkshire County Massachusetts. Over the years,post-industrialization has led to a collapse of the tax base, depopulation and decay of the urban structure. As always, the dominant paradigm of "eds and meds" has proved to be pyrite. MassMoCa was built at great expense as an "anchor" to rejuvenate the city. All along, the large regional Hospital in North Adams was a can't fail entity that would keep some of life's blood pumping through town. At least, until it closed down earlier in 2014. Building North Adams tax base in a systemic way is the subject of this essay.
LVT: A UK Perspective on LVT,Planning and Valuation Issues
Land Value Taxation: An Investigation into Practical Planning and Valuation Problems Greg McGILL and Frances PLIMMER, United Kingdom TS27 – Valuation Techniques and Applications Greg McGill and Frances Plimmer TS27.5 Land Value Taxation: An Investigation Into Practical Planning and Valuation Problems FIG Working Week 2004 Athens, Greece, May 22-27, 2004
LVT and Growth Planning
Incentive property taxation: A potential tool for urban growth management Thomas A Gihring, American Planning Association. Journal of the American Planning Association; Winter 1999
Mason Gaffney on Planning and Land Value Taxation
Published in the AIP journal in May 1969, the trenchant analysis is as relevant today as then.